Another TradeStation Nightmare

Even though I don't stand a chance of being compensated I sent the following e-mail to TradeStation.

I am writing today about an error in your system that cost me a significant amount of money.
I spoke with a Tradestation agent named Bill, from Chicago, about the error and he informed me to e-mail my complaint as follows.

On Thursday October 16, 2008 I had a short position in a single YG contract. I also had an open GTC order to sell one YG contract at market, only to be activated in the event that GCZ08 traded below $822. This open order was placed 10/12/2008 and was good till canceled.

On October 16, 2008 at or about 9:35 a.m., GCZ08 traded below $822 and my order was sent to market. My Tradestation platform verbally and by text informed my "ORDER REJECTED". Why?? Nearly a minute later, and more importantly $34 lower, I was informed by my platform "ORDER FILLED" @ $788. (In that time period GC never traded below $810 and about $1,000 of my capital evaporated in a fraction of a second)

Knowing that something was seriously wrong with the platform at that time I exited the entire position at 9:39 as I tried to analyze the situation. I re-entered my original short position of one YG contract at 9:40

I fully understand the concept of slippage. However, this error was not a product of slippage, it was caused by the order being rejected for some unknown reason. The account had more than sufficient capital at the time. I would like to know why the order was rejected but the rejection has been conveniently deleted from my trade manager. Something is very wrong about that.

I feel that I should have been entitled to a fill much closer to the $822 level. The loss I sustained on one contract from the bogus $788 fill to my forced closing of the position at $822.70 due to perceived errors in your system should be adjusted or compensated.

I sympathize with you but it wasn't only Tradestation though. I was watching that whole move and IB showed the same problem with YG. YG had almost zero liquidity after the big drop and a market order in that scenario is a license to steal. It took the arbs a few seconds to bring it back in alignment but I have no doubt that most anyone with a stop market order in at that time got completely screwed by that move. Use limit orders only in those mini contracts and save yourself the trouble.

I have no doubt that most anyone with a stop market order in at that time got completely screwed by that move. Use limit orders only in those mini contracts and save yourself the trouble.

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I understand and accepted the risk of slippage. However, it is not being slipped that pissed me off, it was the fact that the platform rejected the order for some unknown reason which would lead one to believe that the order is now dead. As I was trying to figure out why the order was killed it was filled. Had I known it was still active after it was rejected I would have canceled it.

Now the rejected order is mysteriously missing from the trade manager, therefore I don't have proof that it was in fact rejected. THAT really pisses me off!

I hear you... I've learned these things the hard way also. Tradestation has lots of problems but I just wanted to give you another perspective because I think you would have had the same bad fill at IB or most any other broker in that scenario. It really did happen in the blink of an eye once the liquidity in YG dried up.

Sorry about the loss but it sounds like you are taking it in stride and that it was not too big a hit in the long run. Good luck...

Sorry about the loss but it sounds like you are taking it in stride and that it was not too big a hit in the long run. Good luck...

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Thanks. It sucks when you patiently wait for a move and when you finally get the move you were waiting for it's the system that screws you. I can handle the losses from my own errors.

When I position trade gold I scale in the first two entries using YG triggered by the moves in GC. If the trade continues in my favor I'll cover the 2 YGs at my third entry point and enter a GC position. At that point I feel comfortable with the liquidity.

The only change I'll make now is to use limits on the YG orders but I'm sure that will lead to some unfilled orders.

The funny twist here is that when I heard my computer blurt out "ORDER REJECTED" (when I was expecting to hear "ORDER FILLED") I was sitting ten feet away from my computer reading "The Disciplined Trader".

I have had similar problems a few times with stocks. Order rejected when it should give order filled. Just this past two weeks. Then the matrix got "stuck" and wouldn't let me cancel/add/change do anything whatsoever. In the end, after my position reversed from profit to loss and losses had increased by about 10% I finally got through to the order desk to verbally fill/cancel. I was told by the order desk when I asked if this was a regular occurrence, what did I expect from computer-based trading(???) - there were always going to be errors. It was the name of the game.
Whatever.
Goodbye TradeStation. :eek:

After having some time to cool off and ponder the situation I have come to this conclusion.

Even though I still feel that the outcome was significantly altered by the order rejection here are MY mistakes that I have to own up to;

1) I trusted TradeStation and their order execution.

2) If I had a LIMIT order sent to market only two possible outcomes could have happened even WITH the platform malfunction, a fill at MY price or no fill at all. It was the fear of getting no fill that caused me to use a market order.
Even though I have used market orders in YG before (activated by moves in GC) with minimal slippage I should have know better.

I like using YG to scale into position and then roll into GC as the trade moves in my favor. I'll have to reconsider this strategy.

Lesson: NEVER EVER USE MARKET ORDERS, an open checkbook to the market makers and specialists.
And remember, with limit orders..."Don't Be a Dick For a Tick!"